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Income Taxes | 3 Months Ended
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Apr. 04, 2020
Income Taxes |
Income Taxes | 11. Income Taxes ​ Provision (benefit) for income taxes includes both domestic and foreign income taxes at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits and other permanent differences. Income tax expense (benefit) was $(0.6) million and $(2.5) million for the three months ended April 4, 2020 and March 30, 2019, resulting in effective tax rates of (35.4)% and (85.0)%, respectively. The effective tax rate for the three months ended April 4, 2020 increased from the prior period primarily due to a decrease in the Company’s excess tax benefits from stock-based compensation , offset by an increase in the Company's Federal research and development credit benefit year over year, further impacted by its relation to pre-tax book income. ​ On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner which concluded that related parties in an intercompany cost-sharing arrangement are not required to share costs related to stock-based compensation. In February 2016, the U.S. Internal Revenue Service (“IRS”) appealed the decision to the U.S Court of Appeals for the Ninth Circuit (the “Ninth Circuit”). On June 7, 2019, the Ninth Circuit reversed the 2015 decision of the U.S. Tax Court. As a result of the Ninth Circuit decision, the Company no longer reflects a tax benefit related to the removal or exclusion of stock-based compensation from its intercompany cost-sharing arrangement within its financial statements. On November 12, 2019, the Ninth Circuit denied a petition for rehearing the case en banc and on February 10, 2020, Altera filed a petition to the U.S. Supreme Court for review of the Ninth Circuit’s decision. As of April 10, 2020, the IRS has received extensions from the Supreme Court until May 14, 2020 to file their response to Altera's petition.The Company will continue to monitor ongoing developments in this matter and potential impacts to its financial statements. ​ Uncertain Tax Positions ​ As of April 4, 2020, the Company had gross unrecognized tax benefits, inclusive of interest, of $3.0 million, of which $2.1 million would affect the effective tax rate if recognized. During the three months ended April 4, 2020, the Company did not release any of its unrecognized tax benefits. ​ The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. These amounts were not material for any of the periods presented. ​ Following the completion of the Norwegian Tax Administration (“NTA”) examination of the Company’s Norwegian subsidiary for income tax matters relating to fiscal years 2013, 2014, 2015 and 2016, the Company received an assessment from the NTA in December 2017 concerning an adjustment to its 2013 taxable income related to the pricing of an intercompany transaction. The Company is currently appealing the assessment. The adjustment to the pricing of the intercompany transaction results in approximately 141.3 million Norwegian kroner, or $13.5 million additional Norwegian income tax. The Company disagrees with the NTA’s assessment and believes the Company’s position on this matter is more likely than not to be sustained. The Company plans to exhaust all available administrative remedies, and if unable to resolve this matter through administrative remedies with the NTA, the Company plans to pursue judicial remedies. ​ The Company believes that it has accrued adequate reserves related to all matters contained in tax periods open to examination. Should the Company experience an unfavorable outcome in the NTA matter, however, such an outcome could have a material impact on its financial statements. ​ Tax years 2015 through 2020 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company is not currently under audit in any major taxing jurisdiction. ​ The Company does not believe gross unrecognized tax benefits will decrease in the next 12 months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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